Wall Street Strategists: Stocks Will Rally After Election

Many bank strategists think Tuesday’s U.S. elections could be positive for stocks, as they have historically gained after close presidential races, regardless of the winner.

Equity markets have rallied an average of 3% following nail-biters, according to analysis from J.P. Morgan Chase & Co. strategist Thomas Lee, who started with the 1940 race between Franklin Roosevelt and Wendell Willkie and measured the stock market’s reaction in six other close elections.

“We believe this reflects the easing of uncertainty, which, as we know, tends to suppress equity valuations,” he wrote in a note to clients Nov. 1.

But as investors wonder about the impact on stocks from the elections, many strategists say that, over the long term, there are certain sectors that stand to win or lose more than the broader market.

“Since the mid-1970s, equity markets have been indifferent to political outcomes,” wrote Goldman Sachs chief U.S. equity strategist David Kostin in a note to clients last month. “At the sector level, politics — and possibly policies — matter more.”

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